Customer survey identifies risks

March 2012

Last week we were talking to a CEO who felt he needed a customer survey. His
issue: the top six per cent of clients gave him 74% of revenue. Mix
this fact with an economic downturn and you get a cocktail that
keeps you up all night.

If just one of his key clients defected or went out of business
it could cause lasting damage to his business. Damage his
organisation may not easily recover from.

Let's look at what's involved in putting in place a customer
survey program that could help you understand which key
clients are at risk and what to do about it.

Customer survey reveals who's at risk

Asking customer
survey questions yourself is less likely to get the frank
and honest feedback you need. They may be telling you exactly what
you want to hear while thinking the opposite.

Understanding which clients are at risk requires a clear and
logical approach to gathering client satisfaction feedback. Our
experience at Insync Surveys has found that the best way to
identify who's at risk is to:

make it clear to them that you want their honest feedback and
are using an independent third party to encourage them to be
open

segment your client base and invest most of the effort into
understanding what your highest value clients think of you. This
may involve third party phone interviews or even face-to-face
discussions with the top 20 clients. In person discussions make it
easier for the client to feel comfortable with telling it like it
is

make the customer
survey process focussed and time efficient, clients are
time poor and if you make the online or telephone feedback process
too long your response rate will fall

have the independent customer
survey provider ask explicitly if clients wish to have
their name attached to their feedback, making sure they understand
that the company really appreciates their openness. They may refuse
but in our experience using a third party increases the chance they
will give permission

Preparing a business case

Before you propose any new program you'll need a business case.
It's important to quantify the investment you're making in
your customer
survey compared to the benefits it will deliver.

Risk

The first step is to quantify the risk of losing one or more of
your A grade or B grade clients. Given that many of your larger
clients may provide revenue into the millions of dollars the
impetus is clear.

Opportunity

Make a matrix with current sales value on one axis and share of
wallet on the other. The biggest clients by sales value represent
your highest risks, while the low wallet share clients represent
the biggest opportunity.

Another big potential opportunity area is clients who have
reduced their spend in the last two years. Some have shrunk and
your share of wallet is the same, but others have gone elsewhere
and might be open to coming back. Compare current sales data with
that of two years ago and target these customers.

Turning these data into a business case isn't easy, but you
still have to do it. Every industry is different, but one client we
know of uses the rule of thumb that 25% of clients could increase
their spending by 50%; giving them a total revenue uplift of 12.5%.
Of course, a well constructedcustomer survey can
actually reveal these statistics.

Finally, a good customer
survey should always ask for referrals. Ask us if you want
to calculate a referral rate that you can then use in your business
case.

Your return on investment estimates will flow from this business
case.

The outcomes

Having a clear understanding of the outcomes from a customer
survey project like this is very important and in our
experience, considering what a research project won't deliver is
also worthwhile.

What you can expect:

a better level of insight from your key clients, as long as you
tailor your collection methodology (e.g. phone calls rather than an
online customer survey for
high risk/opportunity clients)

more candid feedback by using a trusted third party to run
the customer survey so
confidentiality is an option for respondents

using a proven framework and methodology to gather client
feedback will tell a clear story and provide evidence for action
that will stand up to scrutiny by your senior management

key problems in your business will be highlighted, especially if
you tailor the customer survey or
interview to capture data about these specific areas

a clear understanding of where clients place their priorities,
with insights into what the key issues are from the client
perspective

product or service improvement ideas

better business decision making by being closer to the voice of
customer

What you should not expect:

100% response rates. Yes, it's true that on occasion we've been
so effective with our phone calls that we've got more than 100%
response rates for our clients, because other customers have heard
about the research and asked to be included. However, this depends
on how important the supplier is to the client. Where a client
doesn't see you as an important part of their business, they are
less likely to give you feedback

a broad online customer survey is
a great, cost-effective tool to get to the majority of your clients
but if the supplier/client bond isn't very strong then we'll let
you know to expect 10% rather than 60%

don't expect you will get the name and company of every client
who gives feedback, sometimes people just want to remain
anonymous

that every client who is at risk is comfortable telling you,
they may have already decided to leave and don't want to have to
justify themselves

don't expect that the report will give you all the answers. In
our experience, a good customer
survey response takes three ingredients: the report, your
context, and skilled interpretation. Spending that last 20% of
presentations and facilitations doubles the value you get out of
your customer
survey project

A final thought

Collecting customer feedback is a specialised skill. It may be
gathered online via a survey, via telephone or even with a
face-to-face interview. Insync Surveys provides all three of these
client feedback options to listen and record information for
your customer survey.

Many clients will tell an interested person about your
organisation's shortcomings long before they tell you. The good
news is, if you get this information early enough, you will have
time to make it up to them. Systematically seeking and acting on
client feedback provides a sound foundation for building enduring
relationships, a valuable asset in uncertain economic times.